Unusual Problem for Chrysler: Vehicle Shortages

Chrysler Group LLC is actually experiencing some good news. The stoppage of vehicle production is causing a shortage of some of its high-demand vehicles, causing stability in pricing and profit margins. Other automakers are also seeing signs of stability, according to Wall Street Journal.

For the last several years, Chrysler has flooded dealers with inventory and dumped tens of thousands of vehicles a year into rental fleets. The excess supply forced the auto maker to offer rebates averaging $5,600 in February. The large amount of unsold cars also cost dealers steep interest payments.

Since Chrysler shut down all 12 of its assembly plants when it filed for bankruptcy protection April 30, dealers have been drawing from existing inventories of high-demand vehicles such as the Jeep Wrangler and the Chrysler Town and Country minivan or purchasing from dealers who lost their franchises. At the end of May, Chrysler had 260,407 vehicles in stock, down from 479,501 two years earlier.

Other auto makers are also seeing signs of stability. Ford Motor Co. said June 29 that it will raise third-quarter production 16 percent from a year ago, citing lower inventory and increased demand. GM has been working to achieve similar reductions in inventory. At 667,132 vehicles, it had a third fewer cars and trucks on hand at the end of May compared with two years earlier. That decline will likely accelerate this summer as GM shuts down most of its plants for nine weeks.

But the issue can especially be seen for Chrysler dealers. Alan Helfman, owner of River Oaks Chrysler Jeep in Houston, has been sending drivers as far away as Kansas City to buy Jeep Wranglers from other dealers.

That’s about it for the good news, however. Dealers report they still have a glut of other vehicles, such as the Dodge Caliber and the Jeep Patriot.

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Counter bypass is just the beginning. The promise of a “data-driven ecosystem” that connects renters with the rental agency, retail services, and even the city is a better managed fleet, an improved user experience, and new revenue opportunities during the rental itself.